Canadian mortgage debt is going up but also being managed better

By SmartCoverage Team on August 22nd, 2017

After the wild year that Canada's major real estate markets have had, it should come as no surprise to anyone that the nation's overall amount of mortgage debt has gone up over the past 12 months. What's interesting about that, though, is that there hasn't been a corresponding increase in delinquency rates.

That revelation comes courtesy of credit monitoring firm TransUnion, who conducted a study of every active credit file across Canada and publiushed its findings Tuesday. More specifically, it found that the country's average mortgage debt of $198,781 represented a five per cent increase over the previous year. The overall number of mortgage accounts grew as well, going up by approximately 1.2 per cent to hit the six million mark.

Meanwhile, delinquency rates dropped to 0.56 per cent. That translates into approximately one in every 200 mortgage holders that fall behind on their payments.

"Despite increases in mortgage debt, serious delinquency rates remain low with very little volatility observed over the past two years," said Matt Fabian, TransUnion Canada's director of research and analysis. "Consumers have so far been able to manage their mortgage obligations despite the increasing balance levels."

Canada's current mortgage delinquency rate becomes even more impressive once one compares it to the delinquency rates for other types of debt. Credit cards have a 3.11 per cent rate, installment loans sit at four per cent, auto loans at 1.8 per cent, and lines of credit at 1.16 per cent.

It's possible that one of the factors driving the lower delinquency rate was the new mortgage rules introduced last year by the government. Part of those changes was a stress test that prevented home buyers from taking out a mortgage if they wouldn't be able to handle it under slightly more difficult circumstances.